"The combination of Quadra's large-scale open-pit experience with FNX's underground hard-rock expertise provides a full breadth of skill sets within the new company," Quadra president and CEO Paul Blythe said during a conference call after the transaction was announced.

"With these two skill sets combining in a very strong balance sheet, we look forward and intend to be a significant consolidator in the base metal field," added FNX chairman and CEO Terry MacGibbon.

The deal could signal the beginning of another wave of mergers in the global mining industry, four years after the last major shakeout in the sector, propelled by rising metals prices, led to multibillion- dollar foreign buyouts of Canadian icons such as Inco, Falconbridge and Alcan.

With the costs of building new mines prohibitively high, and prices for copper, nickel and other base metals prices rising again because of owth in Asian demand, many companies are seeking mergers or takeovers to cash in on growth opportunities.

BHP, Rio Tinto, Brazil's Vale SA and Anglo-Swiss giant Xstrata are all said to be eyeing each other, as well as smaller companies, looking for possible deals.

FNX's assets are in the Sudbury Basin, where it mines copper, nickel and precious metals at the Levack complex and Podolsky mine. The company sends its ore to Vale Inco's nearby operations to be processed. FNX has about 450 people working at its Greater Sudbury operations.

After the US$1.5-billion stock purchase of FNX by Quadra, the new company will be named Quadra FNX Mining Ltd. with equal representation from both companies at the board level and both current chief executives in key posts.

Current Quadra shareholders would own about 52% of the new company and FNX shareholders would own the rest.

The merger will be done through a share swap, with each FNX share exchanged for 0.87 of a Quadra share. Based on Monday's closing prices, the offer is worth $15.12 per FNX share, a small premium of 1.8%.

FNX shares gained 43 cents, or about 3%, to $15.28 in early afternoon trading on the Toronto Stock Exchange, while Quadra's lost 36 cents, or 2%, to $17.02.

Neither MacGibbon nor David Constable, vice-president of investor relations for FNX, could be reached for comment Tuesday.

In January, Constable told The Star that FNX Mining is focused on copper.

"Right now, our star is hitched to the copper market," he said. "We are out of the nickel business, have been out since the fourth quarter of 2008.We are primarily a copper producer with precious metal sales."

Constable said the company is looking to mine nearly 900,000 tonnes of ore at its Greater Sudbury operations in 2010, producing almost 50 million pounds of copper and eight million pounds of nickel.

Constable said that with China's appetite for nickel remaining constant while world inventories of nickel con-t i nu e to grow, he said it is FNX's view that the world nickel market will fully recover when the North American and European economies get back on their feet. That recovery, he said, won't come until the end of this year or in 2011.

"We have said from the beginning when everything went in the tank, this is going to be a two-, three-year wave," he said.

Quadra's operating mines include Robinson in Nevada, Carlota in Arizona and Franke in Chile, all of which primarily produce copper. It also owns the Sierra Gorda copper project in Chile and the Malmbjerg molybdenum project in Greenland.

Although the merger only represents a small premium to FNX's current share price, it's unlikely another suitor will appear before the deal is closed, said Salman Partners mining analyst Raymond Goldie.

However, he said he wouldn't be surprised to see a competing bid from Xstrata, which owns the former Falconbridge's operations in Sudbury.

"Xstrata ... has challenges in terms of keeping up with enough ore to keep its mills filled and its smelters filled. So, I don't expect it, but I wouldn't be surprised to see a bid from Xstrata to buy FNX," Goldie said.

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Proposed deal

* If the proposed merger is approved, the new,

copper-focused mining company will have a stock market value of $3.5 billion, $580 million in cash and $50 million in debt;

* It is forecast to have 2011 revenue of $1.5 billion and production of 300 million pounds of copper, 150,000 ounces of precious metals and "significant leverage" to byproduct metals, including nickel;

* It will have the option of producing primary nickel at FNX's Sudbury operations.